At year-end 2016, Wallace Landscaping’s total assets were $1.9 million, and its accounts payable were $335,000. Sales, which in 2016 were $2.0 million, are expected to increase by 30% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $470,000 in 2016, and retained earnings were $340,000. Wallace has arranged to sell $80,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 4%, and 35% of earnings will be paid out as dividends. What was Wallace's total long-term debt in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What were Wallace's total liabilities in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar. $ How much new long-term debt financing will be needed in 2017? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows: The inventory at January 1, 2016, had a retail value of $35,000 and a cost of $29,050 based on the conventional retail method. Transactions during 2016 were as follows: Cost Retail Gross purchases $ 154,950 $ 390,000 Purchase returns 5,500 30,000 Purchase discounts 4,000 Gross sales 341,000 Sales returns 5,000 Employee discounts 4,000 Freight-in 30,500 Net markups 15,000 Net markdowns 30,000 Sales to employees are recorded net of discounts. The retail value of the December 31, 2017, inventory was $46,800, the cost-to-retail percentage for 2017 under the LIFO retail method was 80%, and the appropriate price index was 104% of the January 1, 2017, price level. The retail value of the December 31, 2018, inventory was $40,660, the cost-to-retail percentage for 2018 under the LIFO retail method was 79%, and the appropriate price index was 107% of the January 1, 2017, price level.

Required: 1. Estimate ending inventory for 2016 using the conventional retail method. 2. Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method. 3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2017. Estimating ending inventory for 2017 and 2018.

Timmer Company signs a lease agreement dated January 1, 2016, that provides for it to lease equipment from Landau Company beginning January 1, 2016. The lease terms, provisions, and related events are as follows:

Timmer estimates that the equipment has a fair value of $300,000, an economic life of 5 years, and a zero residual value. Timmer’s incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment.

Required:

Timmer Company signs a lease agreement dated January 1, 2016, that provides for it to lease equipment from Landau Company beginning January 1, 2016. The lease terms, provisions, and related events are as follows:

Timmer estimates that the equipment has a fair value of $300,000, an economic life of 5 years, and a zero residual value. Timmer’s incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment.

Required:

1. Record the amortization of the discount for the bond issued on June 1.

2. Prepare the Long-Term Liabilities section of the corporation's balance sheet on December 31, 2016

Analyze:
What is the balance of the Discount on Bonds Payable account on December 31, 2016?.

Analyze the statement of cash flows for Candy Corporation.

a. Prepare a summary analysis of the statements of cash flows for Candy Corporation for 2015 and 2016.

1. Analyze the statement of cash flows for Candy Corporation.

a. Prepare a summary analysis of the statements of cash flows for Candy Corporation for 2015 and 2016.

b. Write an analysis of the statements of cash flows for Candy Corporation for 2015 and 2016. (Analyze operating cash flow, cash inflow, and cash outflow)            

Candy Corporation

Statement of Cash Flows

For the Years Ended December 31, 2016 and 2015

                                                                                                2016                 2015

Net income $1200               ($1500)

Adjustments to reconcile net income to net cash

provided by (used for) operating activities:

Depreciation 550                     660

Changes in assets and liabilities:

            Accounts receivable (1500)                  2100

              Inventory ( 220) (20)

              Accounts payable 1300 (2500)

              Accrued expenses (20) (330)

Net cash provided by (used for) operating activities $1310                 ($1590)

Cash flows from investing activities:

              Additions to property, plant & equipment (440)                 (300)

Cash flows from financing activities:

            Proceeds from long-term debt 500                      700

              Repayments of long-term debt (400)                        ----

              Payment of cash dividends (25) (45)

Net cash provided by financing activities 75 655

Net increase (decrease) in cash $945                  ($1235)

Cash at beginning of period 1765                     3000

Cash at end of period $2710                  $1765

At year-end 2016, Wallace Landscaping’s total assets were $2.0 million, and its accounts payable were $345,000. Sales, which in 2016 were $2.2 million, are expected to increase by 20% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $375,000 in 2016, and retained earnings were $240,000. Wallace has arranged to sell $70,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 8%, and 45% of earnings will be paid out as dividends.

a) What was Wallace's total long-term debt in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar.

b) What were Wallace's total liabilities in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar.

c) How much new long-term debt financing will be needed in 2017? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Problem 12-05
Long-Term Financing Needed

At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $305,000. Sales, which in 2016 were $2.0 million, are expected to increase by 15% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2016, and retained earnings were $315,000. Wallace has arranged to sell $110,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 6%, and 40% of earnings will be paid out as dividends.

What was Wallace's total long-term debt in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
What were Wallace's total liabilities in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar.
$

How much new long-term debt financing will be needed in 2017? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.

$

Question 5

Assume Deloitte & Touche, the accounting firm, advises Deep Sea Seafood that their financial statements must be changed to confirm with GAAP. At December 31, 2016, Deep Sea Seafood accounts include the following:

Deloitte & Touche advised Deep Sea Seafood that:

•     Cash includes $20,000 that is deposited in a compensating balance account that is tied up until

2018.

•     The fair value of the short-term trading investments is $17,000. Deep Sea Seafood purchased

the investments a couple of weeks ago.

      Deep Sea Seafood has been using the direct write-off method to account for uncollectible

receivables. During 2016, Deep Sea Seafood wrote off bad receivables of $7,000. Deloitte &

Touche determines that bad debt expense for the year should be 2.5% of sales revenue, which

totaled $600,000 in 2016.

•     Deep Sea Seafood reported net income of $92,000 in 2016.

1.    Restate Deep Sea Seafood’s current accounts to conform to GAAP.
2.    Compute Deep Sea Seafood’s current ratio and acid-test ratio before and after your corrections.
3.    Determine Deep Sea Seafood’s correct net income for 2016.

In recent years, Pharoah Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

Machine
Acquired
Cost
Salvage
Value
Useful Life
(in years)
Depreciation
Method
1
Jan. 1, 2015       $135,500       $35,500       10       Straight-line
2
July 1, 2016       81,500       10,200       5       Declining-balance
3
Nov. 1, 2016       77,600       7,600       6       Units-of-activity

For the declining-balance method, Pharoah Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 35,000. Actual hours of use in the first 3 years were: 2016, 710; 2017, 5,000; and 2018, 6,400.

  
Compute the amount of accumulated depreciation on each machine at December 31, 2018.

MACHINE 1
MACHINE 2
MACHINE 3
Accumulated Depreciation at December 31
$enter a dollar amount
39800
$enter a dollar amount
58028
$enter a dollar amount
53380

  
If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2016? In 2017?

2016
2017
Depreciation Expense
$enter a dollar amount
$enter a dollar amount